Adam Leitman Bailey, P.C. was hired to represent an Upper East Side condominium board in litigation involving a defaulting unit owner and her mortgage lender. The unit owner had stopped paying both her mortgage and her common charges, leading the lender to bring a mortgage foreclosure. Because New York law provides that a condominium’s charge lien is secondary to the mortgage on the unit, the foreclosure action prevented the condo from enforcing its lien for its charges. Had the condominium merely allowed the foreclosure to proceed, it would have almost certainly received nothing, and the unit owner would have been able to live in the apartment without paying the condominium charges until the lender completed the foreclosure.
To avoid this, Adam Leitman Bailey, P.C. brought a separate contract action for the condominium charges, which proceeded more quickly than the foreclosure and would result in a money judgment holding the unit owner personaly liable for unpaid charges. Adam Leitman Bailey, P.C. negotiated a settlement with the unit owner under which the unit owner moved out and deeded the apartment to the condominium board in exchange for relief from past-due charges. This allowed the condominium to rent out the unit to make up the common charge deficit.
Once the board had title to the unit, Adam Leitman Bailey, P.C. turned to defeating the foreclosure. Because the foreclosing lender was a Mortgage-Backed Securities (MBS) trust that initially brought the case at the height of the “robo-signing” scandal using a firm shut down because of its central role in the scandal, we believed at the outset that the foreclosure could be challenged because of document deficiencies. After a careful review of the foreclosure papers, we determined that the trust had filed inconsistent versions of the mortgage note with the court, that assignment documents required to be signed by the originating lender may have been wrongfully signed by agents of the MBS trust, that the purported transfer from the originating lender had occurred after it was liquidated in bankruptcy, and that the MBS trust had failed to provide evidence that it actually possessed the mortgage note at the time it had brought the case.
Because the MBS trust was unable to refute this evidence marshaled by Adam Leitman Bailey, P.C. the Supreme Court, New York County granted Adam Leitman Bailey, P.C.’s motion to dismiss the foreclosure, leaving title in the board’s name and allowing the board to continue to generate revenue by renting out the unit.
William Geller and Colin Kaufman appeared on behalf of Adam Leitman Bailey, P.C.